Steve Lohr in the Business Standard has a great article about economists leaving the ivory tower for Silicon Valley. I love this article because it highlights the human element. I can see you asking yourself already what correlation does the dismal science have with the human element of digital transformation? Well, as an economics graduate myself, you will find a huge amount of overlap. But let me let snippets of the article speak:
But what the tech economists are doing is different: Instead of thinking about national or global trends, they are studying the data trails of consumer behaviour to help digital companies make smart decisions that strengthen their online marketplaces in areas like advertising, movies, music, travel and lodging.
At Netflix, Randall Lewis, an economic research scientist, is finely measuring the effectiveness of advertising. His work also gets at the correlation-or-causation conundrum in economic behaviour: What consumer actions occur coincidentally after people see ads, and what actions are most likely caused by the ads?
Google’s insight was to avoid giving the best ad placement to the highest bidder. Varian worked to develop a different model for ad placement, calculating the probability that a user will click on an ad and find the ad relevant. It was a classic example of smart market design.
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Each of these examples shows both a business and a human element. The business component highlights the value in making sense of the data and finding insights into the microeconomic elements of the business. If you dig a little deeper though, you find out why these economists have been successful.
- Randall Lewis at Netflix is working to ensure they know how to best personalize your experience by showing you what’s important to you and not some miss that we see so often in our digital experiences.
- Google changed ad placement but what they really did was make the ads more relevant to you using their model rather than a more simple model of whoever pays the most gets the spot they want.
The need is the same. As you focus on your own digital transformation, you need to understand your users better. You need to focus on creating that great experience. I find some small pleasure in saying that it’s not just those creative user experience types that can influence the experience. Economists can too, just in a different way.
Read the whole article. It’s has more nuggets of information than the short blurbs I highlight here.